1. FX Outlook
  2. Daily FX Report



ECB President Lagarde stated that inflation is far too high and that interest rates are expected to increase further with the rhetoric broadly currency neutral.

Council member Knot stated that the pace of rate hikes is likely to slow as policy tightens further. He added that he expected rates to reach broadly neutral territory at next month’s policy meeting. The comments maintained expectations that the pace of rate hikes would slow which limited potential Euro support.

Overall, narrow ranges prevailed during the day with markets waiting for fresh developments. The Euro was unable to break above the 1.0400 level, but there was support just above 1.0325 and the Euro settled little change at the European close as it failed to recover ground.

Latest CFTC data recorded a switch to a net short, non-commercial dollar position for the first time since July 2021. The net long Euro position also increased to the highest level since March 2021. The overall shift in positioning will make it difficult for the Euro to make further headway with the risk of sharp position adjustment. 

The dollar was underpinned by weaker risk conditions on Monday with the Euro retreating to below the 1.0300 level and posting further losses to near 1.0250 as equities moved lower. Rhetoric from Fed officials will continue to be monitored closely with Chair Powell due to speak next week.




US existing home sales declined to an annual rate of 4.43mn for October from 4.71mn the previous month, but slightly above consensus forecasts of 4.38mn.

Fed Governor Collins stated that the central bank needs to increase interest rates further and that rates will need to remain at a higher level for some time. She added that the recent data had increased the top of the range where rates are likely to go. She did, however, also comment that there is a risk that the Fed may go too far in raising rates. According to Collins, all possible rate-hike increments should be on the table in December.

Treasuries edged lower after the European open and the dollar advanced to highs close to 140.30 before settling just below the 140.00 level as tight ranges prevailed.

Atlanta Fed President Bostic stated that he was ready to move away from 75 basis-point increments at the December meeting while he expected further interest rate hikes of 75-100 basis points. Markets continue to expect that there will be a smaller hike at next month’s meeting.

There were fresh concerns over Chinese coronavirus trends in Asian trading on Monday with a further increase in cases and some small-scale lockdowns which cast further doubt on the ability to ease restrictions. The dollar gained net defensive support and the US currency advanced to the 140.75 area against the yen.




Sterling gained an element of support from the latest retail sales data and there was an element of relief surrounding the Autumn Statement with hopes that the spending squeeze would be less harsh than expected. There were still important reservations surrounding the underlying UK fundamentals, especially with substantial budget and current account deficits which will continue over the medium term.

Overall risk appetite held steady on Friday which provided some protection to the UK currency. Sterling advanced to highs at 1.1950 against the dollar and settled above 1.1900 at the European close after finding support below this level with further choppy trading.

Sterling drifted below 1.1900 at the US close while the Euro retreated significantly to around 0.8680 as markets continued to monitor risk conditions.

CFTC data recorded a further small decline in Sterling shorts to a 10-week low below 35,000 contracts in the latest week from over 36,500 the previous week with hedge-fund positioning likely to remain a key element for the currency in the near term.

Global risk conditions will remain important for Sterling and contributed to the more defensive tone on Monday as equities moved lower. Markets will also continue to assess the underlying UK outlook with the UK currency retreating to lows near 1.1800 while the Euro edged higher to 0.8690.




The Euro rallied at times during Friday, but was unable to hold the best level and was held below the 0.9900 level with a retreat to 0.9855. The dollar hit a high close to 0.9550 before fading slightly. Overall trading was relatively subdued during the day with market waiting for further developments surrounding global monetary policy and interest rates. The franc gained fresh support on Monday amid weaker risk conditions with the Euro losing ground while the dollar secured a small net advance to just above 0.9550. National Bank rhetoric surrounding the December policy decision will continue to be monitored closely in the short term.

Technical Level

211122 Tech



This is a marketing communication. The information in this report is provided solely for informational purposes and should not be regarded as a recommendation to buy, sell or otherwise deal in any particular investment. Please be aware that, where any views have been expressed in this report, the author of this report may have had many, varied views over the past 12 months, including contrary views.

A large number of views are being generated at all times and these may change quickly. Any valuations or underlying assumptions made are solely based upon the author’s market knowledge and experience.

Please contact the author should you require a copy of any previous reports for comparative purposes. Furthermore, the information in this report has not been prepared in accordance with legal requirements designed to promote the independence of investment research. All information in this report is obtained from sources believed to be reliable and we make no representation as to its completeness or accuracy.

This report is not subject to any prohibition on dealing ahead of the dissemination of investment research. Accordingly, the information may have been acted upon by us for our own purposes and has not been procured for the exclusive benefit of customers. Sucden Financial believes that the information contained within this report is already in the public domain. Private customers should not invest in these products unless they are satisfied that the products are suitable for them and they have sought professional advice. Please read our full risk warnings and disclaimers.

Sign up to get the latest market insights

We will email you each time a new report has been published.

You might also be interested in...